July 29, 2010

Sample of Food Price Inflation from 1980 to 2010

Didn't milk used to cost like $1.50 a gallon or something?  Now it seems milk is $3 a gallon.  I think I remember spending 22¢ a pound on bananas and now they are like 70¢.   Have food costs really doubled in the past 10 years or so??    Am I just remembering prices wrong?   Or worse yet, I turning into an old man before my time by waxing nostalgic about how "In my day, candy bars used to cost a quarter!!".  

I decided to take a look at real data on the price of foods over the past and get the truth of the matter.

The BLS tracks the Consumer Price Index.  They have information on inflation and they track data for various individual food prices.  I picked a fairly random sample of food items meant to cover major topics:

Bread, white, pan, per lb. (453.6 gm)   
Flour, white, all purpose, per lb. (453.6 gm)   
Ground beef, 100% beef, per lb. (453.6 gm)   
Chicken breast, bone-in, per lb. (453.6 gm)   
Bananas, per lb. (453.6 gm)   
Potatoes, white, per lb. (453.6 gm)   
Coffee, 100%, ground roast, all sizes, per lb. (453.6 gm)   
Margarine, stick, per lb. (453.6 gm)

Here is a list of the foods, which year the BLS data starts at and the annual inflation from the start of the data up until 2010.  I got the BLS data for the US City Average and I'm just looking at January prices just to make the math simpler.  I'm assuming there isn't a lot of month to month volatility in prices or if there is its just due to temporary conditions like bad weather causing a drought or something.

Here's the inflation data per item:

 
Food Bread Flour Beef Chicken Bananas Potatoes Coffee Margarine
Start  1980 1980 1984 1980 1980 1988 1980 1984
Inflation 3.4% 3.0% 2.2% 1.9% 2.0% 3.9% 0.6% 1.7%

The foods in question have been going up at inflation rates in the 0.6% to 3.4% range.    From 1981 to 2010 food prices as a whole increased at an inflation rate of 3.0%.   The overall inflation rate (CPI) in that same time period from '81 to 2010 was 3.2%.

Looking at the a graphical chart of the actual prices we see the upward trend :

Gaps are due to data missing for certain years from the BLS information.

Most of the food prices I looked at increased in price fairly steadily at an upward gradual increase over the years.   But the price of coffee was pretty volatile with it jumping up and down by large %'s from year to year.  More often than not the prices goes up or down by more than 6%.  The price jumped drastically from 1994 to 1995.   I did a quick google search and found a reference in a book 'South America, Central America and the Caribbean 2003' that said: "In June and July 1994 coffee prices escalated sharply, following reports that as much as 50% of the 1995/96 Brazilian crop had been damaged by frosts"  There you go, a bad crop caused the price to jump.

Generally the cost of the commodity food items I looked at have had relatively mild inflation over the past 3 decades in the range of 0.6% to 3.9%.  Individual food items may go up at a rate slightly higher or lower than foods in general or CPI, but the long term inflation of foods I looked at are within 1% of the general CPI.  Keep in mind this is just a sample of 8 foods and other foods have behaved differently.

2 comments:

  1. Using BLS as a source for anything leads to phony figures. See http://www.thepeoplehistory.com/80sfood.html for real food prices in the 1980s. Overall, they've increased a LOT more than a mere 3 percent annually. Samples:

    Navel Oranges $1.39 for 10 - New York 1980
    Tomatoes 39 cents per pound - New York 1980
    Ground Beef $1.39 per pound - New York 1980
    Bread Sliced 55 cents - New Jersey 1986
    White Sliced bread 50 cents - Pennsylvania 1981
    Apples 39 cents a pound - Wyoming 1986
    Bacon $1.69 cents per pound - New Jersey 1986

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  2. The BLS data is not 'phony'. While I agree you do have to be careful with what conclusions you make, the numbers there are not 'phony'.

    First, note that the article here is nearly 3 years old. Clearly prices have changed since then. For example ground beef is up a LOT and from 2010 to 2013 has been going up around 15% a year. That increases the inflation rate from 1984 to 2013 to about 3.6%. Up a lot from the 2.2% I figured back in 2010.

    Second, the numbers at The Peoples History are just one data point per food item. Thats pretty much anecdotal and not a very good sample. I don't doubt that they're real numbers, but you can get a lot of variation from location to location or from store to store. I can find a wide variation in prices in my own city just looking between the different grocery stores.

    Prices also vary seasonally and we don't know what month or time of year The Peoples HIstory numbers are from. For example the seasonal variations in tomatoe prices are +/- 20% of the annual average. So are those prices from the winter or summer??

    The prices you cite from Peoples History are not really much off from 3% annual inflation. Compound inflation for 33 years at 3% would multiply prices about 2.65.

    The prices you give would put inflation for bread and beef right at about 3% looking at todays prices. Safeway has beef for $3.99 and if it was $1.39 in 1980 then thats 3.2%. Course if I shop around a little I can probably find beef cheaper. Yet I just figured beef inflation from '84 to '13 is 3.6% which is higher than the rate you're numbers would show.

    If you look up oranges then BLS data shows the index going from .33 to .99 from 1980 to 2013. So thats a tripling of price or about 3.4% inflation for the period. Today I can get an 8 pound bag of navel oranges at Safeway for $6.60. Thats about 20 oranges or works out to $3.30 for 10. Going from 1.39 to 3.30 in 33 years is just 2.6%.

    Bacon at $1.69 in 1986 compared to todays retail price of about of about $4 would give inflation of 3%.

    Tomatoes at 39c a pound compares to $1.50 today. Thats a rate of about 4.1% inflation so those are higher than 3%. Whereas BLS data says prices went from index of 0.7 to 1.5 which is up just 2.3%. So we differ there.

    Also keep in mind that prices do vary based on location. So for an individual commodity the average price could differ as much as 20% from one region to another.


    Lets look at prices from The Peoples history for the 1990's.
    http://www.thepeoplehistory.com/90sfood.html

    They have apples at 99 cents per pound in 1998. Today I can get apples for $1.10 /lb. So do you believe that THe Peoples History data proves that apples have inflated at an annual rate of 0.6% in the past 15 years?? The BLS says prices are up about 40% total for that period or about 2.3% annual inflation.

    Jim

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